Aided by an increase in same-store community-level operating
results on a year-over-year basis and net operating income (NOI)
from newly completed assets, BRE Properties reported
third-quarter 2013 core fund from operations (FFO) of 65 cents
per share on Nov 4, which surpassed the Zacks Consensus Estimate
by 1.6%.

Despite posting decent quarterly results, the stock descended
5.7% since then. We believe the concerns surrounding the taper
issues and the rising yields on the U.S. Treasury 10-year note
triggered the fall.

Moreover, with a considerable number of projects nearing
completion, supply is likely to increase in the near term. This
could slow down rent growth as more companies seek occupancy.

Additionally, in the third quarter, the company experienced a dip
in NOI from operating assets sold in 2012 and 2013, and a decline
in partnership and management fee income from joint venture
interests offloaded in 2012 and 2013.

Nevertheless, in the medium term, new starts are likely to be
pushed back amid rising construction costs and interest expenses.
Also, BRE Properties' portfolio in supply-constrained premium
U.S. markets gives it a competitive edge.

Moreover, we expect the company to benefit in the long-term from
growing demand driven by 'echo boomers' - children of the baby
boomer generation - who prefer to move out of their parent's
house but are restrained by a volatile job market and mounting
student debt.

For BRE Properties, the Zacks Consensus Estimate for 2013 and
2014 FFO per share has remained flat at $2.51 and $2.66,
respectively, over the last 7 days. The stock currently has a
Zacks Rank #3 (Hold).

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